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83-64 Implementation of the Revised Direct Participation Programs Principal Examination (Series 39)

TO: All NASD Members and Interested Persons

ATTENTION: Training Directors and Registration Personnel

Effective February 1, 1984, the NASD will implement changes to the Direct Participation Programs Principal Examination (Series 39). These revisions were made by the Association under the overall direction of the Qualifications Committee of the Board. At the inception of each examination program, a review committee of industry experts is formed by the Qualifications Committee to work with the NASD staff in identifying the areas to be covered on the test and to approve each question to be used in the examination program. This process continues after an examination program is implemented with periodic meetings of the review committee to review new questions, to review questions with problem statistics and to effect revisions occasioned by changes in the tax laws and securities statutes and regulations. This revision to the Series 39 examination reflects such changes as they relate to direct participation programs and will be incorporated into all Series 39 examinations administered on February 1, 1984.

The revised study outline for Series 39 can be ordered from the Association's Executive Office in Washington, D. C, or any of its 14 District Offices. The cost per copy is $2.00, prepaid.

The material in the new study outline is divided among five major subject matter areas. These five areas are listed below with the number of questions from each area to be selected for inclusion in an examination. The total number of questions selected for an examination will be 100 (up from 50 questions on the current examination) and candidates will be required to score 70 percent or better in order to pass. The Series 39 examination will continue to be administered on the PLATO System of the Control Data Corporation. Testing time for the examination will be two hours.


Section Title

Number of Items In Each Examination


Structure of Direct Participation Programs



Supervision of Underwriting Activities



Sales Supervision; General Supervision of Employees; Regulatory Framework of NASD



Compliance with Financial Responsibility Rules



NASA A Guidelines





New material added to the examination includes the following:

  • Section One

IRS partnership qualification requirements and tax consequences of direct participation programs.

  • Section Two

Updated to include Regulation D under the Securities Act of 1933 and Appendix F under Section 34 of the NASD Rules of Fair Practice.

  • Section Three

Remains unchanged.

  • Section Four

Coverage of the financial responsibility rules has been expanded to cover in greater detail the rules that apply to firms specializing in the sale of direct participation programs.

  • Section Five

NASAA Guidelines for real estate and oil and gas programs have been added to assure comparability between the Association's program and state regulation of these products.

Questions regarding this notice should be directed to Carole Hartzog in the Qualifications Department at (202) 728-8141.


Frank J.McAuliffe
Vice President
Qualifications and Examinations

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